TY - JOUR
AU - Chai,Jingjing
AU - Maurer,Raimond
AU - Mitchell,Olivia S.
AU - Rogalla,Ralph
TI - Exchanging Delayed Social Security Benefits for Lump Sums: Could This Incentivize Longer Work Careers?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 19032
PY - 2013
Y2 - May 2013
DO - 10.3386/w19032
UR - http://www.nber.org/papers/w19032
L1 - http://www.nber.org/papers/w19032.pdf
N1 - Author contact info:
Jingjing Chai
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: chai@finance.uni-frankfurt.de
Raimond Maurer
Goethe University Frankfurt
Finance Department
Theodor-W. Adorno Platz 3
60323 Frankfurt am Main
Germany
E-Mail: maurer@finance.uni-frankfurt.de
Olivia S. Mitchell
University of Pennsylvania
The Wharton School
3620 Locust Walk, St 3000 SH-DH
Philadelphia, PA 19104-6302
Tel: 215-898-0424
Fax: 215/898-0310
E-Mail: mitchelo@wharton.upenn.edu
Ralph Rogalla
Finance Department
Goethe University
Grüneburgplatz 1 (Uni-PF. H 23)
Frankfurt am Main
Germany
E-Mail: rogalla@finance.uni-frankfurt.de
AB - Social Security benefits are currently provided as a lifelong benefit stream, though some workers would be willing to trade a portion of their annuity streams in exchange for a lump sum amount. This paper explores whether allowing people to receive a lump sum as a payment for delayed retirement rather than as an addition to their lifetime Social Security benefits might induce them to work longer. We model the factors that influence how people trade off a Social Security stream for a lump sum, and we also examine the consequences of such tradeoffs for work, retirement, and life cycle wellbeing. Our base case indicates that workers given the chance to receive their delayed retirement credit as a lump sum payment would boost their average retirement age by 1.5-2 years. This will interest policymakers seeking to reform the Social Security system without raising costs or cutting benefits, while enhancing the incentives to delay retirement.
ER -